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Tuesday, August 11, 2009

415. 16,000 MILE ICE CUBES IN THE YEAR 1833

Lately I've been reading A Splendid Exchange: How Trade Shaped the World by William Bernstein, a fascinating book which details the history of world trade from the days of Sumer to modern times. This book will definitely disabuse you of the naive notion that peak oil (or anything else) is going to put an end to world trade, and return us to the good old days of rural autarky. The fact is, there never were such days. The human impulse to trade is innate and unstoppable, and has been a core driver of events throughout the course of human history.

There are lots of interesting stories and data points in the book, and I'll share more as time goes on, but I found this bit particularly amazing:

On September 5, 1833, the American clipper Tuscany appeared at the mouth of India's Hooghly River, took on a river pilot, and headed upstream to Calcutta. The news of its arrival was swiftly related upriver, throwing that city, whose name is synonymous with sweltering heat, into a state of excitement. The Tuscany carried a new and priceless cargo: more than a hundred tons of crystal-clear New England ice. (P. 332)

This turned out to be one of the most lucrative routes in the international network of the world's original ice trader, Frederic Tudor:

In 1833, fellow Boston-based merchant Samuel Austin proposed a partnership for selling ice to India, then some 16,000 miles (26,000 km) and four months away from Massachusetts. On May 12, 1833 the brig Tuscany sailed from Boston for Calcutta, its hold filled with 180 tons of ice cut during the winter. When it approached the Ganges in September 1833, many believed the delivery was an elaborate joke, but the ship still had 100 tons of ice upon arrival. Over the next 20 years, Calcutta would become Tudor's most lucrative destination, yielding an estimated $220,000 in profits.

It's pretty far-fetched to think that a manageable adjustment like peak oil is going to kill the 1,500 mile salad when 16,000 mile ice cubes were a thriving and profitable trade almost 200 years ago, in the pre-fossil fuel period.

28 Comments:

Oceanic trade will become more important with the decline of fossil fuels. The work is still in the small experimental stage with fuel cell airplanes, so much that today goes by plane will go by ship.

And in the 18th century, ice from New England was sold in the American South and British Caribbean. Before that, grain from Poland, Lithuania and Russia was sold in Holland, Spain and Italy, beginning in the 15th century or there abouts, and Dutch and Italian cheeses made the return trip. This was a sea traffic, with sailing ships, not a drop of oil used.

I don't know whether oceanic trade will "collapse" due to "peak oil" or anything else but there will certainly be alot more strain on it with the world's population expected to reach 9 billion by 2040-2050. There are obviously alot more people in the world today than in 1833. The world's population began to increase massively after the industrial revolution (and demographic transition):

http://en.wikipedia.org/wiki/File:Population_curve.svg

If the price of fossil fuels continues to rise due to their growing scarcity as well as the increasing demand of an overpopulated world (especially in newly industrializing nations), transportation costs will be at exceedingly high levels. I find alot of your posts interesting JD but comparing modern trans-oceanic trade to an example from pre-industrial times (i.e. when the world's population was tiny compared to today) has little relevance.

It seems to me during the previous oil scare (Limits to Growth etc.-1979-1980) I saw pictures of modern-day cargo vesels, still powered by bunker fuel, but endowed with sails. The price of shipping a container is small next to the value of the contents. Even clothes are shipped. Remember, cargo liners could get bigger, or more efficient, and counter-act higher fuel costs. Maybe we will see CNG vessels. Actually, the USA would benefit greatly if production moved back onshore. I think there is a hope of this--but due to a falling dollar, and rising living standards in China, the greatest manufacturing platform ever.Peak Oil is much less important than the behavior of man. How the US manages its financial system, how China adapts to higher-end production--trade will turn on such things, not fossil fuels.

I reckon that world oceanic trade will be at least 50% bigger in 2020 than it is now. It's possible that truck freight may have shrunk and shifted to rail, though I'd still give it high odds that it won't have shrunk at all.The world economy, however, will be at least 50% bigger in line with trade by 2020.

People usually quote the wheel is being the classic first invention. In terms of land transport, it was significant. But it was easily predated by sea-going boats, and at least one civilisation had boats but no wheels.

Once you have a boat, you have an effective trade route, if only along the coastal routes. In the Mediterranean, that all you need to create an empire.

It's interesting to speculate about the transition from neolithic to Bronze Age and the link to sea going trade routes. Artefacts discovered from this time suggest communities with very distant roots, if not an active sea trade network. How to explain artefacts from Egypt and Africa turning up in ancient Mesopotamia?

It's usual to assume that if modern academics don't know about it, it didn't happen, but it is obvious there is a lot more to prehistory than we know about. Much of that period is simple lost.

I am greatly intrigued by Graham Hancock's theory that navigation by sea and extensive sea transport networks go back to the last glacial maximum. Otherwise it is difficult to explain maps that suddenly appear in the Middle Ages, which not only show features that European explorers had not been to, but also appear to show coastlines when the sea level was much lower.

It's controversial, but I'll bet there was local sea trading going back much further than 4000 BCE.

Trade is something that all humans have always done. It will not be stopped, except by tyrants using force. Environmentalists who want to stop trade really want to be tyrants who use force to make their subjects do as the tyrants please.

There is nothing wrong with world trading and I don't think it will ever stop. People enjoy trading at all levels. The problem is that we have become addicted to trading, we put trading above our own health and well being. Maybe one day we can have more Fairtrade, trading as if people and the environment really mattered.

Would I pay $8 for a head of lettuce in February? Yes. But I'd buy far fewer. That's how I see peak oil.

$8/head isn't going to happen due to increased diesel prices. An average head of lettuce weighs about 2 lbs and costs about $2-3. Transport by truck over 3000 miles from California to New York can be done at an efficiency of roughly 90.5 net ton miles gallon (with the truck returning empty). So the total trip for one head is 3 ton miles, and requires about .03 gallons (about 8 tablespoons) of diesel costing roughly 7 cents (assuming $2.50/gal diesel). No oil spike is going to turn that 7 cents into $6.

For comparison, at the US average of 20mpg, that same 8 tablespoons will take you about 0.6 miles. So any local lettuce distribution is going to have to be real efficient to compete.

Also, the calculation above is very conservative. It assumes the longest possible distance within the US, an empty return trip etc. It also ignores the potential for more efficient transport by train, as well as fuel substitution with NG and electricity.

With lettuce the problem is one of volume and climate control. It's bulky stuff that's fragile and isn't very dense. It's shipped very loosely in crates/boxes that weigh something themselves. In reality the trailer is mostly filled with air. (We're talking real greens here, not shitty iceberg lettuce.) How much of those beautiful California greens can be loaded on a climate controlled truck? That's the limiting factor, not weight. The 90.5 net ton/miles stat that you are using is for grain. Very different stuff. (Dense, no climate control)

This info sheet from Caterpillar says that pulling an empty trailer is only 21% more efficient than pulling a full one. (page 13) Thus most of energy usage is tied to the weight of the empty vehicle and wind resistance.

I don't have any figures..... but for illustration: if shipping fuel costs were 1/5 as efficient per ton for lettuce as for grain and the price of diesel reaches $10 gallon, that adds $1.66 to your 2lbs of greens. Basically doubles it. And the retailer adds his markup to that.

Are we at $8 lettuce yet? Nope. But we are getting in the neighborhood.

My suspicion is that the density of Californian greens (lbs/per cubic foot) is more like 1/20 of grain. Then $8 lettuce looks cheap.

Did some research at my local supermarket (complete with measuring tape) and it turns out that a grain product like white flour is 13x more dense than packaged California greens. The later are packaged in plastic boxes which are full except for the air around the leaves.

These density measures really matter as can be seen from a quotation from the efficiency stats page you provided in your earlier post.

The truck averaged 249.6 gross ton-miles per gallon when loaded and 108.8 gross ton-miles per gallon when empty.

Wow.The doomer meme is spreading big time. I was at a client site and I went to talk to one of my clients at her cubicle and I overheard a kid in his 20s repeating the whole peak oil doom shtick to this rapt young chick in her 20s also.

I agree with your main point but salad/produce may be your worst example.

Even before the recent oil spike greenhouse tomatoes and lettuce where competing very well against shipped tomatoes and lettuce.This is a potential technology change like manufactured ice against hauled ice.Even without a major oil spike you could see a shift with it you almost certainly will.

High speed transport and strong local competition is one area that peak oil could make a difference.

DB, I think one reason the "doomer" meme is spreading among young people such as myself (28) is that we have never experienced such an economic downturn in our adult lives. Of course, having been sucked into the whole doom thing for a short time and gotten out of it, I look back at some of those people as being quite looney. You can't work towards the future if you're convinced it isn't there, and creating "The Village" isn't going to save you either.

Oh-oh, it looks like Black Lizard is throwing a tizzy about non-OPEC crude declining at a glacial pace. I've got news for you, Lizard boy: you'll have to pay a Greek pantheon or two for a bed bug-ridden frontier cot to shiver your britches underneath, not $8 for a head of lettuce.

Yup, the peak crows have practically been expecting the Second Coming ever since Cantarell bottomed out. Amazing, isn't it? We have the likes of the N Sea and Cantarell playing the role of anchors to "Davy Jones's Locker," and yet, non-OPEC production only lost 300,000 barrels last year. It's only lost 1 mbpd total since apparently peaking in 2004; production is even up a smidgen this year. In fact, if it wasn’t for Canatrell’s loss last year, non-OPEC production would have been at or close to the break-even point.

So I say: Let Cantarell crap out. With only about 700,000 bpd of production left, it doesn't have the room to do much more damage. The only problem is: Mexico receives roughly 40% of its tax revenue from oil; so Dr. Clifford Wirth may seriously need to reconsider his post-peak oil sit for sustainable living...

Actually, I just got to thinking of an article I read three years ago. It was about two "Produce Express" freight trains - operated by Union Pacific Railroad and CSX - running 55-car trains from Washington State to NY State in five days, loaded with mostly produce. According to the article:

"When Ampco began its planning, diesel fuel cost $1.50 a gallon, said spokesman Paul Esposito. Today, it's twice that. Switching to rail will save 84,000 gallons of fuel a week, or more than 4.3 million a year. With the doubling of fuel prices, the $6.4 million in annual savings grows to $12.8 million."

And...

"The trains are expected to cut fuel consumption by about two-thirds, according to figures from Esposito."

A 55-car train is roughly a mile long, the equivalent to 200 trucks. Each car is refrigerated.

The post-panamax class of containerships are gargantuan monsters; gently roaming the seas.

These vessels carry more than ten thousand containers. They have 3-4 story tall diesel engines with ladders going into the crank case. The displacement of each piston is a tad below 2 cubic metres. At ~400 metres they're a tad longer than the empire state building is tall.

It would be trivial to power these ships with nuclear reactors using exactly the same well seasoned tech used in russian ice-breakers, US naval ships and sub marines. But it would probably be more attractive to use pebble bed reactors or molten salt thorium reactors when they are eventually commercialized.

Worries about international trade are absolutely delusional.

If you're going to worry, worry about domestic trade. If goods must be shipped to or from your location with diesel trucks it could get very expensive; unlike rail it is non-trivial to electrify and nowhere near as efficient to begin with.

The west, and in particular Britain and the US has been importing massive amounts from stuff, things of real value, and exporting mostly debt in return. This is debt that will not be fully repayed, much less pay interest. This is mortgage backed securities, which are trash, and sovereign debt which will be repaid in devalued dollars and devalued pounds.

The chinese would rather consume their own goods themselves rather than giving it away to someone who can't fully pay the asking price. It has exactly nothing to do with oil prices. It reeks of desperation on your part to try and link the two.

>> This book will definitely disabuse you of the naive notion that peak oil (or anything else) is going to put an end to world trade

I don't think anyone exactly says that.

Not exactly but pretty close, it's the assumption underlying the relocalization idea.

There are a few flawed assumptions behind globalization, but one in particular is glaring: the assumption that transportation costs will always be low, both in terms of fuel availability and the environmental externalities associated with their use.xxiv If that assumption is false—and certainly peak oil and climate change makes it appear false—then localities should not be specializing to trade globally. Relocalization: A Strategic Response to Climate Change and Peak Oil

And a typical quote from the peanut gallery: Horrifying to contemplate on a large scale perhaps, but local overshoot is the driving force behind global overshoot if the global trade economy can't be maintained.

The doomer principle being that cheap oil has vastly increased globalization, and therefore expensive fuel will reverse globalization. But as JD points out, the assumption behind this principle is seriously flawed.

Methinx it was PBS that had an illuminating documentary on those american ice exports. Wiki has a good summary page on this episode for those wanting more info: http://en.wikipedia.org/wiki/Frederic_Tudor

"It's pretty far-fetched to think that a manageable adjustment like peak oil is going to kill the 1,500 mile salad when 16,000 mile ice cubes were a thriving and profitable trade almost 200 years ago, in the pre-fossil fuel period."

Uh-oh JD, don't let JHK see this- after all he needs to keep his "long emergency" dream fantasy alive so he can sell his books and speaking engagements in order to make his mortgage payment. Wait- mortgage payments...isn't that racket supposed to be over with now according to Kunstler- along with world trade, globalization and everything else?

Of course Kunstler will never give up- he'll spend the rest of his life repeating ad nauseam that everything is "over with," that we must stay in one place, become farmers and learn how to repair bicycles and shoes.

"It's pretty far-fetched to think that a manageable adjustment like peak oil is going to kill the 1,500 mile salad when 16,000 mile ice cubes were a thriving and profitable trade almost 200 years ago, in the pre-fossil fuel period."

Only the aristocracy had 1,500 mile salads in 1833.

I draw your attention to your own quote,

"The news of its arrival was swiftly related upriver, throwing that city, whose name is synonymous with sweltering heat, into a state of excitement."

The news excited the whole city. This suggests that it was a remarkable and not daily event; whereas the 1,500 mile salad is today unremarkable and quite daily for all.

The 1830s certainly had global trade, but the volume of trade, the physical tonnage of goods shipped from A to B, this was much smaller - even compared to the smaller population.

Global trade will never disappear due to peak fossil fuels. But there's every prospect for a significant contraction in trade volume.

Hi Kiashu, Nice to have you drop by. I wasn't so much trying to make a direct comparison between the 1,500 mile salad and 16,000 mile ice cube, but rather suggesting the amazing ingenuity, capabilities and drive to trade, even in the pre-fossil era. I don't think transport will actually go all the way back to 1833. I agree that there may be some attenuation in trade, but I remain very skeptical of the localization argument.